Making Your Money Last in Retirement

It is called Sequence of Returns Risk and it could have a huge effect on how long your money lasts in retirement.

If you experience negative returns early in your retirement and are withdrawing funds for income, your money may not last through retirement.

This is Sequence of Returns risk. 

As an example, two retirees with identical portfolios and average returns but one has a few bad years of investment returns early in retirement while the other sees strong early returns. 

The first may run out of money sooner because he had to sell more of their investments to fund their income. 

This leaves the first retiree with fewer assets to potentially grow later on. 

This is why it is important to be more conservative in the five years before and after retirement so you don’t have more retirement at the end of your money.